Room At The Top For Westin?Richard A. Melcher
The job search was weeks old when it took a decisive turn at New York's Waldorf-Astoria. As investors looked on, CEO candidate Juergen Bartels dropped to his knees and proffered a rose. The bankers were at first astonished, then listened attentively as Bartels explained how he used the technique to thank travel agents for directing business to Radisson Hotels International Inc. Barry S. Sternlicht, president of Starwood Capital Group, was won over: "He has limitless enthusiasm and knows how to fire up a sales force."
Both assets will be in hot demand as Bartels takes on what one hotelier describes as "one of the toughest jobs in the industry." On May 15, when Starwood, along with Goldman, Sachs & Co. and their partners, closed on the purchase of the 80-unit Westin Hotel Co. chain, they chose Bartels, 54, as its CEO. They appear to be getting Westin at a bargain price: They're paying Japan's Aoki Corp. $537 million for it, less than 18 months after a $708 million deal with another buyer fell through. Aoki itself paid $1.53 billion for Westin in 1988.
TARNISHED. Rivals say Westin's image and profitability have slipped during the two years it has been shopped around. The buyers, who also include the Edward Thomas Cos. and Nomura Asset Capital Corp., have committed $50 million more to the chain. And Goldman Sachs Vice-President Stuart M. Rothenberg says future capital from the group may be "fairly limitless." Says Bartels: "We want aggressive high-quality growth."
Bartels, a native of Germany, aims to add 60 hotels to Westin over the next five years. He'll use some strategies from his days as CEO of Carlson Cos.' Carlson Hospitality Group Inc., where he helped expand Radisson from 25 hotels to 302 by acquiring new management contracts and pushing into franchising, as well as forging closer ties with travel agents. His new bosses at Westin also may buy other chains.
Still, Westin faces plenty of competition in the market for first-class hostelry. Occupancy and room rates finally are climbing after years of overbuilding. But revived rivals, such as Hyatt, Marriott, and Sheraton, are on the prowl for new properties and management contracts, too. In a pinch, Bartels may have to fall back again on the old woo-'em-with-a-rose technique.